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TMI Blog2019 (11) TMI 1791X X X X Extracts X X X X X X X X Extracts X X X X ..... g the appeal and a condonation petition was filed along with Affidavit. On examination of the petition, we found that there is a reasonable cause for the delay. The learned Departmental Representative has no serious objection for condonation of delay. Accordingly, the delay is condoned and appeal is heard. 3. The assessee has raised the following grounds of appeal : 4. The Brief facts of the case are that the assessee is a co-operative society engaged in providing credit facilities to its members and filed Return of Income for the Assessment Year 2015-16 on 11.09.2015 with gross total income of Rs.72,78,233 and after claiming deduction under Chapter VI A, the total income is NIL. Subsequently, the case was selected for scrutiny under CASS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra). The Assessing Officer considering the later judgment has restricted the deduction under Section 80P(2) and assessed the total income. Aggrieved by the order, the assessee has filed an appeal with the CIT(Appeals) whereas the CIT(Appeals) considering the submissions and interest on investments / deposits to the extent of Rs.6,87,487 was treated as income from other sources and denied deduction under Section80P(2)(ai) of the Act. Aggrieved by the CIT (Appeals) order, the assessee filed appeal to the Tribunal. The learned Authorised Representative made submissions relying on the judicial decisions and the ld. DR relied on CIT (Appeals) order. 5. We heard the rival submissions and perused material on record. The only disputed issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the benefit of deduction under section 80P(2)(a)(i) of the Act is only on income which is assessable under the head "Income from Business". Interest earned on investment of surplus funds not immediately required in short term deposits and securities by a Cooperative Society providing credit facilities to members or marketing agricultural produce to members is not business income but income from other sources and the society is not entitled to special deduction. 5. While learned AR relied on the decision of the Hon'ble Karnataka High Court in the case of Tumukur Merchants Souharda Credit Cooperative Ltd., 230 taxman 309 (Karn), the DR relied on a subsequent decision of the Hon'ble Karnataka High Court in the case of PCIT Vs. Totgar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the supreme Court in The Totgars Co-operative Sales Society Ltd. (supra) and held that interest earned from Schedule bank or cooperative bank is assessable under the head income from other sources and therefore the provisions of Sec.80P(2)(d)of the Act was not applicable to such interest income. It is thus clear that the source of funds out of which investments were made remained the same in AY 2007-08 to 2011-12 and in AY 1991- 92 to 1999-2000 decided by the Hon'ble Supreme Court. Therefore whether the source of funds were Assessee's own funds or out of liability was not subject matter of the decision of the Hon'ble Karnataka High Court in the decision cited by the learned DR. To this extent the decision of the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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